UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period From _________ To _________
 Commission File Number:000-30421
 HANMI FINANCIAL CORPORATION
 (Exact Name of Registrant as Specified in its Charter)
 Delaware
    
    95-4788120(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)
 3660 Wilshire Boulevard, Penthouse Suite ALos Angeles, California
    
    90010(Address of Principal Executive Offices)
    
    (Zip Code)
 (213) 382-2200
 (Registrants Telephone Number, Including Area Code)
 Not Applicable
 (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
 þ o
 o o
  Large Accelerated Filer o
Accelerated Filer þ
Non-Accelerated Filer o(Do Not Check if a Smaller Reporting Company)
Smaller Reporting Company o o þ




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES   QUARTERLY REPORT ON FORM 10-Q   THREE MONTHS ENDED MARCH 31, 2010
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSConsolidated Balance Sheets (Unaudited)
    
    
    1Consolidated Statements of Operations (Unaudited)
    
    
    2Consolidated Statements of Changes in Stockholders Equity and Comprehensive Loss
(Unaudited)
    
    
    3Consolidated Statements of Cash Flows (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    26ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    51ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    51PART II  OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    54ITEM 1A.
    
    RISK FACTORS
    
    
    54ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    54ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    54ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    54ITEM 5.
    
    OTHER INFORMATION
    
    
    54ITEM 6.
    
    EXHIBITS
    
    
    55SIGNATURES
    
    
    57




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##### 



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)  (Dollars in Thousands, Except Share Data)
 March 31,
    
    
    December 31,2010
    
    
    2009ASSETSCash and Due From Banks
    
    $
    59,677
    
    
    $
    55,263Interest-Bearing Deposits in Other Banks
    
    
    139,540
    
    
    
    98,847Cash and Cash Equivalents
    
    
    199,217
    
    
    
    154,110Securities Held to Maturity, at Amortized Cost (Fair Value of $862 as of March 31, 2010
and
$871 as of December 31, 2009)
    
    
    862
    
    
    
    869Investment Securities Available for Sale, at Fair Value (Amortized Cost of $111,001 as of
March 31, 2010 and $130,995 as of December 31, 2009)
    
    
    113,369
    
    
    
    132,420Loans Receivable, Net of Allowance for Loan Losses of $177,820 as of March 31, 2010 and
$144,996 as of December 31, 2009
    
    
    2,494,966
    
    
    
    2,669,054Loans Held for Sale, at the Lower of Cost or Fair Value
    
    
    10,104
    
    
    
    5,010Customers Liability on Acceptances
    
    
    1,914
    
    
    
    994Premises and Equipment, Net
    
    
    18,236
    
    
    
    18,657Accrued Interest Receivable
    
    
    9,026
    
    
    
    9,492Other Real Estate Owned
    
    
    22,399
    
    
    
    26,306Deferred Income Taxes
    
    
    
    
    
    
    3,608Servicing Assets
    
    
    3,590
    
    
    
    3,842Other Intangible Assets
    
    
    3,055
    
    
    
    3,382Federal Home Loan Bank Stock, at Cost
    
    
    30,697
    
    
    
    30,697Federal Reserve Bank Stock, at Cost
    
    
    7,878
    
    
    
    7,878Income Taxes Receivable
    
    
    59,680
    
    
    
    56,554Bank-Owned Life Insurance
    
    
    26,639
    
    
    
    26,408Other Assets
    
    
    16,669
    
    
    
    13,425TOTAL ASSETS
    
    $
    3,018,301
    
    
    $
    3,162,706LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Deposits:Noninterest-Bearing
    
    $
    575,015
    
    
    $
    556,306Interest-Bearing
    
    
    2,075,265
    
    
    
    2,193,021Total Deposits
    
    
    2,650,280
    
    
    
    2,749,327Accrued Interest Payable
    
    
    13,146
    
    
    
    12,606Acceptances Outstanding
    
    
    1,914
    
    
    
    994Federal Home Loan Bank Advances
    
    
    153,898
    
    
    
    153,978Other Borrowings
    
    
    4,428
    
    
    
    1,747Junior Subordinated Debentures
    
    
    82,406
    
    
    
    82,406Other Liabilities
    
    
    11,207
    
    
    
    11,904Total Liabilities
    
    
    2,917,279
    
    
    
    3,012,962COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common Stock, $0.001 Par Value; Authorized 200,000,000 Shares; Issued 55,814,890
Shares (51,182,390 Shares Outstanding) as of March 31, 2010 and December 31, 2009
    
    
    56
    
    
    
    56Additional Paid-In Capital
    
    
    357,359
    
    
    
    357,174Unearned Compensation
    
    
    (281
    )
    
    
    (302
    )Accumulated Other Comprehensive Income  Unrealized Gain on Securities Available
for Sale and Interest-Only Strips, Net of Income Taxes of $1,002
and $602 as of March 31, 2010 and December 31, 2009, Respectively
    
    
    1,417
    
    
    
    859Accumulated Deficit
    
    
    (187,517
    )
    
    
    (138,031
    )Less Treasury Stock, at Cost: 4,632,500 Shares as of March 31, 2010 and December 31,
2009
    
    
    (70,012
    )
    
    
    (70,012
    )Total Stockholders Equity
    
    
    101,022
    
    
    
    149,744TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,018,301
    
    
    $
    3,162,706
  1




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##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  (Dollars in Thousands, Except Per Share Data)
 Three Months EndedMarch 31,2010
    
    
    2009INTEREST AND DIVIDEND INCOME:Interest and Fees on Loans
    
    $
    36,695
    
    
    $
    45,085Taxable Interest on Investment Securities
    
    
    1,070
    
    
    
    1,350Tax-Exempt Interest on Investment Securities
    
    
    77
    
    
    
    643Interest on Term Federal Funds Sold
    
    
    
    
    
    
    700Dividends on Federal Reserve Bank Stock
    
    
    118
    
    
    
    153Interest on Federal Funds Sold and Securities Purchased Under Resale Agreements
    
    
    17
    
    
    
    82Interest on Interest-Bearing Deposits in Other Banks
    
    
    55
    
    
    
    2Dividends on Federal Home Loan Bank Stock
    
    
    21
    
    
    
    Total Interest and Dividend Income
    
    
    38,053
    
    
    
    48,015INTEREST EXPENSE:Interest on Deposits
    
    
    9,704
    
    
    
    22,785Interest on Federal Home Loan Bank Advances
    
    
    346
    
    
    
    1,112Interest on Junior Subordinated Debentures
    
    
    669
    
    
    
    988Total Interest Expense
    
    
    10,719
    
    
    
    24,885NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES
    
    
    27,334
    
    
    
    23,130Provision for Credit Losses
    
    
    57,996
    
    
    
    45,953NET INTEREST LOSS AFTER PROVISION FOR CREDIT LOSSES
    
    
    (30,662
    )
    
    
    (22,823
    )NON-INTEREST INCOME:Service Charges on Deposit Accounts
    
    
    3,726
    
    
    
    4,315Insurance Commissions
    
    
    1,278
    
    
    
    1,182Remittance Fees
    
    
    462
    
    
    
    523Trade Finance Fees
    
    
    351
    
    
    
    506Other Service Charges and Fees
    
    
    412
    
    
    
    483Bank-Owned Life Insurance Income
    
    
    231
    
    
    
    234Net Gain on Sales of Investment Securities
    
    
    105
    
    
    
    1,167Net Gain on Sales of Loans
    
    
    
    
    
    
    2Other Operating Income
    
    
    440
    
    
    
    66Total Non-Interest Income
    
    
    7,005
    
    
    
    8,478NON-INTEREST EXPENSE:Salaries and Employee Benefits
    
    
    8,786
    
    
    
    7,503Other Real Estate Owned Expense
    
    
    5,700
    
    
    
    143Occupancy and Equipment
    
    
    2,725
    
    
    
    2,884Deposit Insurance premiums and Regulatory Assessments
    
    
    2,224
    
    
    
    1,490Data Processing
    
    
    1,499
    
    
    
    1,536Professional Fees
    
    
    1,066
    
    
    
    616Advertising and Promotion
    
    
    535
    
    
    
    569Supplies and Communications
    
    
    517
    
    
    
    570Amortization of Other Intangible Assets
    
    
    328
    
    
    
    429Loan-Related Expense
    
    
    307
    
    
    
    181Other Operating Expenses
    
    
    2,537
    
    
    
    2,429Total Non-Interest Expense
    
    
    26,224
    
    
    
    18,350LOSS BEFORE BENEFIT FOR INCOME TAXES
    
    
    (49,881
    )
    
    
    (32,695
    )Benefit for Income Taxes
    
    
    (395
    )
    
    
    (15,499
    )NET LOSS
    
    $
    (49,486
    )
    
    $
    (17,196
    )LOSS PER SHARE:Basic
    
    $
    (0.97
    )
    
    $
    (0.37
    )Diluted
    
    $
    (0.97
    )
    
    $
    (0.37
    )WEIGHTED-AVERAGE SHARES OUTSTANDING:Basic
    
    
    50,998,990
    
    
    
    45,891,043Diluted
    
    
    50,998,990
    
    
    
    45,891,043DIVIDENDS DECLARED PER SHARE
    
    $
    
    
    
    $
    
  2




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##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND COMPREHENSIVE LOSS (UNAUDITED)  (Dollars in Thousands)
 Common StockNumber of Shares
    
    Stockholders EquityAccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Treasury
    
    
    TotalTreasury
    
    
    
    
    
    
    Common
    
    
    Paid-in
    
    
    Unearned
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Stock,
    
    
    StockholdersIssued
    
    
    Stock
    
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    Compensation
    
    
    Income
    
    
    Deficit
    
    
    at Cost
    
    
    EquityBALANCE AS OF JANUARY 1, 2009
    
    
    50,538,049
    
    
    
    (4,632,500
    )
    
    
    45,905,549
    
    
    $
    51
    
    
    $
    349,304
    
    
    $
    (218
    )
    
    $
    544
    
    
    $
    (15,754
    )
    
    $
    (70,012
    )
    
    $
    263,915Shares Issued for Business Acquisitions
    
    
    39,418
    
    
    
    
    
    
    
    39,418
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46Share-Based Compensation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    236
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    242Forfeiture of Restricted Stock Award
    
    
    (4,000
    )
    
    
    
    
    
    
    (4,000
    )
    
    
    
    
    
    
    (64
    )
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,196
    )
    
    
    
    
    
    
    (5,196
    )Change in Unrealized Gain on Securities
Available for Sale and Interest-Only Strips,
Net of Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,236
    
    
    
    
    
    
    
    
    
    
    
    1,236Total Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,960
    )BALANCE AS OF MARCH 31, 2009
    
    
    50,573,467
    
    
    
    (4,632,500
    )
    
    
    45,940,967
    
    
    $
    51
    
    
    $
    349,522
    
    
    $
    (148
    )
    
    $
    1,780
    
    
    $
    (20,950
    )
    
    $
    (70,012
    )
    
    $
    260,243BALANCE AS OF JANUARY 1, 2010
    
    
    55,814,890
    
    
    
    (4,632,500
    )
    
    
    51,182,390
    
    
    $
    56
    
    
    $
    357,174
    
    
    $
    (302
    )
    
    $
    859
    
    
    $
    (138,031
    )
    
    $
    (70,012
    )
    
    $
    149,744Share-Based Compensation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    206Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49,486
    )
    
    
    
    
    
    
    (49,486
    )Change in Unrealized Gain on Securities
Available for Sale and Interest-Only Strips,
Net of Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    558
    
    
    
    
    
    
    
    
    
    
    
    558Total Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,928
    )BALANCE AS OF MARCH 31, 2010
    
    
    55,814,890
    
    
    
    (4,632,500
    )
    
    
    51,182,390
    
    
    $
    56
    
    
    $
    357,359
    
    
    $
    (281
    )
    
    $
    1,417
    
    
    $
    (187,517
    )
    
    $
    (70,012
    )
    
    $
    101,022
  3




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##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  (In Thousands)
 Three Months EndedMarch 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net Loss
    
    $
    (49,486
    )
    
    $
    (17,196
    )Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities:Depreciation and Amortization of Premises and Equipment
    
    
    644
    
    
    
    669Amortization of Premiums and Accretion of Discounts on Investments, Net
    
    
    200
    
    
    
    (1,101
    )Amortization of Other Intangible Assets
    
    
    327
    
    
    
    429Amortization of Servicing Assets
    
    
    252
    
    
    
    235Share-Based Compensation Expense
    
    
    206
    
    
    
    242Provision for Credit Losses
    
    
    57,996
    
    
    
    45,953Net Gain on Sales of Securities Available for Sale
    
    
    (105
    )
    
    
    (1,167
    )Net Gain on Sales of Loans
    
    
    
    
    
    
    (2
    )Loss on Sales of Other Real Estate Owned
    
    
    95
    
    
    
    Provision for Valuation Allowance on Other Real Estate Owned
    
    
    5,537
    
    
    
    126Deferred Tax Benefit
    
    
    3,208
    
    
    
    Origination of Loans Held for Sale
    
    
    (3,369
    )
    
    
    (201
    )Proceeds from Sales of Loans Held for Sale
    
    
    2,959
    
    
    
    3,361Decrease in Accrued Interest Receivable
    
    
    466
    
    
    
    645Increase in Servicing Asset
    
    
    
    
    
    
    (74
    )Increase in Cash Surrender Value of Bank-Owned Life Insurance
    
    
    (231
    )
    
    
    (234
    )Increase in Other Assets
    
    
    (3,230
    )
    
    
    (14,004
    )Increase in Income Taxes Receivable
    
    
    (3,126
    )
    
    
    Increase in Accrued Interest Payable
    
    
    540
    
    
    
    8,695Increase (Decrease) in Other Liabilities
    
    
    524
    
    
    
    (1,844
    )Net Cash Provided By Operating Activities
    
    
    13,407
    
    
    
    24,532CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from Matured or Called Securities Available for Sale
    
    
    16,953
    
    
    
    27,069Proceeds from Matured or Called Securities Held to Maturity
    
    
    7
    
    
    
    Proceeds from Sales of Securities Available for Sale
    
    
    3,252
    
    
    
    38,447Proceeds from Sales of Other Real Estate Owned
    
    
    2,482
    
    
    
    Net Decrease in Loans Receivable
    
    
    105,980
    
    
    
    28,249Purchases of Securities Available for Sale
    
    
    (305
    )
    
    
    (27,758
    )Purchases of Premises and Equipment
    
    
    (223
    )
    
    
    (659
    )Net Cash Provided By Investing Activities
    
    
    128,146
    
    
    
    65,348CASH FLOWS FROM FINANCING ACTIVITIES:(Decrease) Increase in Deposits
    
    
    (99,047
    )
    
    
    126,029Repayment of Long-Term Federal Home Loan Bank Advances and Other Borrowings
    
    
    (80
    )
    
    
    (121
    )Net Change in Short-Term Federal Home Loan Bank Advances and Other Borrowings
    
    
    2,681
    
    
    
    (110,026
    )Net Cash (Used In) Provided By Financing Activities
    
    
    (96,446
    )
    
    
    15,882NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    45,107
    
    
    
    105,762Cash and Cash Equivalents at Beginning of Period
    
    
    154,110
    
    
    
    215,188CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    199,217
    
    
    $
    320,950SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash Paid During the Period for:Interest Paid
    
    $
    10,179
    
    
    $
    16,190Income Taxes Paid
    
    $
    2
    
    
    $
    Non-Cash Activities:Stock Issued for Business Acquisition
    
    $
    
    
    
    $
    46Transfer of Loans to Loan Held for Sale
    
    $
    4,684
    
    
    $
    Transfer of Loans to Other Real Estate Owned
    
    $
    4,397
    
    
    $
    509Loan Provided in the Sale of Other Real Estate Owned
    
    $
    190
    
    
    $
    
  4




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##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 NOTE 1  BASIS OF PRESENTATION
    Note 2  Summary of
Significant Accounting Policies
  NOTE 2  REGULATORY MATTERS AND GOING CONCERN CONSIDERATION
  5




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##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 2  REGULATORY MATTERS AND GOING CONCERN CONSIDERATION (Continued)
  Final Order and Written Agreement
   Ratio of Tangible ShareholdersDate
    
    Equity to Total Tangible AssetsBy December 31, 2009
    
    Not Less Than 7.0 PercentBy July 31, 2010
    
    Not Less Than 9.0 PercentFrom December 31, 2010 and Until the Order is Terminated
    
    Not Less Than 9.5 Percent
  6




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##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 2  REGULATORY MATTERS AND GOING CONCERN CONSIDERATION (Continued)
  
    
    The Board Committees have been reorganized after a Board assessment was conducted to
leverage the
experience and skill base of our directors and to improve Board oversight of the Banks
operations.
    
    Tools such as a master calendar of scheduled events and policy exception trigger tables have
been created
to assist the Board in its ability to monitor the Banks operations more effectively.
    
    Jung Hak Son, a 24 year employee of the Bank, was appointed to the Chief Credit Officer
position on
December 23, 2009 and the Bank received notice that the regulatory agency interposed no
objection to his
appointment on March 18, 2010.
    
    Loan policies and procedures continue to be adjusted and enhanced to keep current with the
rapidly
changing credit and economic environment.
    
    Quantitative and qualitative factors in our allowance for loan losses have been updated to
reflect the higher
risk in the loan portfolio due to the recessionary economy.
    
    Allowance methodology has been enhanced to better allocate reserves according to more
specified loss and concentration risks.
    
    The credit department has also been reorganized and reinforced with additional personnel to
increase the
level of management loan review and loan monitoring.
    
    Written plans have been developed for each problem loan greater than $3 million and the
plans have been
implemented and are being monitored to improve loan work out and loan collection.
    
    The Banks strategic plan has been reviewed and revised, and the revised plan has been
approved by the
Board of Directors.
    
    The Banks liquidity management plan and contingency funding plan have been significantly
revised to
reflect the additional restrictions and challenges of the market.
    
    The capital plan has been revised and significant effort is being made to raise the required
capital within the
time frame mandated by the Order.
    
    A Board Compliance Committee has been organized to monitor the progress toward full
compliance with
all the provisions of the Agreement and the Order and approves the related progress reports at
least on a monthly basis prior to submission to the DFI and FRB according to the schedule
established.
  7




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 2  REGULATORY MATTERS AND GOING CONCERN CONSIDERATION (Continued)
 Capital Plan
  Risk-Based Capital
   To be Categorized asMinimum
    
    Well CapitalizedRegulatory
    
    under Prompt CorrectiveActual
    
    Requirement
    
    Action ProvisionAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioMarch 31, 2010
    
    (Dollars in Thousands)Total Capital (to Risk-Weighted Assets):Hanmi Financial
    
    $
    211,989
    
    
    
    7.86
    %
    
    $
    215,856
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    210,354
    
    
    
    7.81
    %
    
    $
    215,493
    
    
    
    8.00
    %
    
    $
    269,366
    
    
    
    10.00
    %Tier 1 Capital (to Risk-Weighted Assets):Hanmi Financial
    
    $
    129,394
    
    
    
    4.80
    %
    
    $
    107,928
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    174,741
    
    
    
    6.49
    %
    
    $
    107,746
    
    
    
    4.00
    %
    
    $
    161,619
    
    
    
    6.00
    %Tier 1 Capital (to Average Assets):Hanmi Financial
    
    $
    129,394
    
    
    
    4.20
    %
    
    $
    123,265
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    174,741
    
    
    
    5.68
    %
    
    $
    123,027
    
    
    
    4.00
    %
    
    $
    153,783
    
    
    
    5.00
    %
 Going Concern
  8




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 2  REGULATORY MATTERS AND GOING CONCERN CONSIDERATION (Continued)
    NOTE 3  FAIR VALUE MEASUREMENTS
 Fair Value Option and Fair Value Measurements
 Fair Value Measurements and Disclosures,
 Financial Instruments, Note 3  Fair Value Measurements.
 Fair Value Measurements and Disclosures (Topic 820) Note 3  Fair Value Measurements.
 9




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
  Investment Securities Available for Sale
   Loans Held for Sale
 Impaired Loans Receivables,
 Other Real Estate Owned
 10




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
 Servicing Assets and Servicing Liabilities
 Other Intangible Assets
 Investments  Debt and Equity Securities,
 Fair Value Measurement
  
    Level 1
    Quoted prices (unadjusted) for identical assets or liabilities in active
markets that the entity has the ability to access as of the measurement date.
    Level 2
    Significant other observable inputs other than Level 1 prices, such as quoted
prices for similar assets or liabilities, quoted prices in markets that are not active, and
other inputs that are observable or can be corroborated by observable market data.
    Level 3
    Significant unobservable inputs that reflect a companys own assumptions about the assumptions that market participants would use in pricing an asset or liability.
 11




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
   Level 2SignificantObservableLevel 1
    
    
    Inputs WithQuoted Prices in
    
    
    No Active
    
    
    Level 3Active Markets
    
    
    Market With
    
    
    Significant
    
    
    Balance as offor Identical
    
    
    Identical
    
    
    Unobservable
    
    
    March 31,Assets
    
    
    Characteristics
    
    
    Inputs
    
    
    2010(In Thousands)ASSETS:Debt Securities Available for Sale:Residential Mortgage-Backed Securities
    
    $
    
    
    
    $
    58,418
    
    
    $
    
    
    
    $
    58,418U.S. Government Agency Securities
    
    
    24,850
    
    
    
    
    
    
    
    
    
    
    
    24,850Collateralized Mortgage Obligations
    
    
    
    
    
    
    9,840
    
    
    
    
    
    
    
    9,840Asset-Backed Securities
    
    
    
    
    
    
    8,010
    
    
    
    
    
    
    
    8,010Municipal Bonds
    
    
    
    
    
    
    6,937
    
    
    
    
    
    
    
    6,937Other Securities
    
    
    
    
    
    
    3,262
    
    
    
    1,258
    
    
    
    4,520Total Debt Securities Available for Sale
    
    $
    24,850
    
    
    $
    86,467
    
    
    $
    1,258
    
    
    $
    112,575Equity Securities Available for Sale:Financial Service Industry
    
    $
    794
    
    
    $
    
    
    
    $
    
    
    
    $
    794Total Equity Securities Available for Sale
    
    $
    794
    
    
    $
    
    
    
    $
    
    
    
    $
    794Total Securities Available for Sale
    
    $
    25,644
    
    
    $
    86,467
    
    
    $
    1,258
    
    
    $
    113,369Servicing Assets
    
    $
    
    
    
    $
    
    
    
    $
    3,590
    
    
    $
    3,590LIABILITIES:Servicing Liabilities
    
    $
    
    
    
    $
    
    
    
    $
    200
    
    
    $
    200
  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)Realized andUnrealizedBeginning
    
    
    
    
    
    Realized and
    
    Gains or Losses
    
    
    
    
    
    EndingBalance as of
    
    Purchases,
    
    Unrealized
    
    in Other
    
    Transfers
    
    Balance as ofJanuary 1,
    
    Issuances and
    
    Gains or Losses
    
    Comprehensive
    
    In and/or Out
    
    March 31,2010
    
    Settlements
    
    in Earnings
    
    Income
    
    of Level 3
    
    2010(In Thousands)ASSETS:Securities Available for Sale:Other Securities
    
    $
    1,258
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,258Servicing Assets
    
    $
    3,842
    
    
    $
    
    
    
    $
    (252
    )
    
    $
    
    
    
    $
    
    
    
    $
    3,590LIABILITIES:Servicing Liabilities
    
    $
    (216
    )
    
    $
    
    
    
    $
    16
    
    
    $
    
    
    
    $
    
    
    
    $
    (200
    )
 12




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
 Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
  Level 2SignificantObservableLevel 1

    
    Inputs WithQuoted Prices in
    
    No Active
    
    Level 3Active Markets
    
    Market With
    
    Significant
    
    Balance as offor Identical
    
    Identical
    
    Unobservable
    
    March 31,Assets
    
    Characteristics
    
    Inputs
    
    2010(In Thousands)ASSETS:Loans Held for Sale
    
    $
    
    
    
    $
    10,104
    
    
    $
    
    
    
    $
    10,104Impaired Loans
    
    $
    
    
    
    $
    229,885
    
    
    $
    
    
    
    $
    229,885Other Real Estate Owned
    
    $
    
    
    
    $
    22,399
    
    
    $
    
    
    
    $
    22,399Other Intangible Assets
    
    $
    
    
    
    $
    
    
    
    $
    3,055
    
    
    $
    3,055
 
 (1)
    
    Includes real estate loans of $110.4 million,
and commercial and industrial loans of $119.5 million.
    March 31, 2010
    
    December 31, 2009Carrying
    
    Estimated
    
    Carrying
    
    Estimatedor Contract
    
    Fair
    
    or Contract
    
    FairAmount
    
    Value
    
    Amount
    
    Value(In Thousands)Financial Assets:Cash and Cash Equivalents
    
    $
    199,217
    
    
    $
    199,217
    
    
    $
    154,110
    
    
    $
    154,110Investment Securities Held to Maturity
    
    
    862
    
    
    
    862
    
    
    
    869
    
    
    
    871Investment Securities Available for Sale
    
    
    113,369
    
    
    
    113,369
    
    
    
    132,420
    
    
    
    132,420Loans Receivable, Net of Allowance for Loan Losses
    
    
    2,505,070
    
    
    
    2,464,351
    
    
    
    2,674,064
    
    
    
    2,573,080Accrued Interest Receivable
    
    
    9,026
    
    
    
    9,026
    
    
    
    9,492
    
    
    
    9,492Investment in Federal Home Loan Bank Stock
    
    
    30,697
    
    
    
    30,697
    
    
    
    30,697
    
    
    
    30,697Investment in Federal Reserve Bank Stock
    
    
    7,878
    
    
    
    7,878
    
    
    
    7,878
    
    
    
    7,878Financial Liabilities:Noninterest-Bearing Deposits
    
    
    575,015
    
    
    
    575,015
    
    
    
    556,306
    
    
    
    556,306Interest-Bearing Deposits
    
    
    2,075,265
    
    
    
    2,075,265
    
    
    
    2,193,021
    
    
    
    2,197,866Borrowings
    
    
    240,732
    
    
    
    241,563
    
    
    
    236,453
    
    
    
    237,354Accrued Interest Payable
    
    
    13,146
    
    
    
    13,146
    
    
    
    12,606
    
    
    
    12,606Off-Balance Sheet Items:Commitments to Extend Credit
    
    
    186,989
    
    
    
    194
    
    
    
    262,821
    
    
    
    177Standby Letters of Credit
    
    
    17,925
    
    
    
    72
    
    
    
    17,225
    
    
    
    37
 13




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
  Cash and Cash Equivalents
 Investment Securities
 Loans Receivable, Net of Allowance for Loan Losses
 Accrued Interest Receivable
 Investment in Federal Home Loan Bank and Federal Reserve Bank Stock
 Interest-Bearing Deposits
 Borrowings
 Accrued Interest Payable
 Commitments to Extend Credit and Standby Letters of Credit
 14




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 4  INVESTMENT SECURITIES
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gain
    
    
    Loss
    
    
    Value(In Thousands)March 31, 2010:Municipal Bonds
    
    $
    696
    
    
    $
    
    
    
    $
    
    
    
    $
    696Mortgage-Backed Securities(1)
    
    
    166
    
    
    
    
    
    
    
    
    
    
    
    166$
    862
    
    
    $
    
    
    
    $
    
    
    
    $
    862December 31, 2009:Municipal Bonds
    
    $
    696
    
    
    $
    
    
    
    $
    
    
    
    $
    696Mortgage-Backed Securities(1)
    
    
    173
    
    
    
    2
    
    
    
    
    
    
    
    175$
    869
    
    
    $
    2
    
    
    $
    
    
    
    $
    871
 
 (1)
    
    Collateralized by residential mortgages and guaranteed by U.S. government
sponsored entities.  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gain
    
    
    Loss
    
    
    Value(In Thousands)March 31, 2010:Mortgage-Backed Securities (1)
    
    $
    56,957
    
    
    $
    1,505
    
    
    $
    45
    
    
    $
    58,418U.S. Government Agency Securities
    
    
    24,996
    
    
    
    16
    
    
    
    162
    
    
    
    24,850Collateralized Mortgage Obligations (1)
    
    
    9,628
    
    
    
    212
    
    
    
    
    
    
    
    9,840Asset-Backed Securities
    
    
    7,848
    
    
    
    163
    
    
    
    
    
    
    
    8,010Municipal Bonds
    
    
    6,831
    
    
    
    142
    
    
    
    36
    
    
    
    6,937Other Securities
    
    
    4,230
    
    
    
    333
    
    
    
    43
    
    
    
    4,520Equity Securities
    
    
    511
    
    
    
    283
    
    
    
    
    
    
    
    794$
    111,001
    
    
    $
    2,654
    
    
    $
    286
    
    
    $
    113,369December 31, 2009:Mortgage-Backed Securities (1)
    
    $
    65,218
    
    
    $
    1,258
    
    
    $
    144
    
    
    $
    66,332U.S. Government Agency Securities
    
    
    33,325
    
    
    
    
    
    
    
    562
    
    
    
    32,763Collateralized Mortgage Obligations (1)
    
    
    12,520
    
    
    
    269
    
    
    
    
    
    
    
    12,789Asset-Backed Securities
    
    
    8,127
    
    
    
    61
    
    
    
    
    
    
    
    8,188Municipal Bonds
    
    
    7,369
    
    
    
    82
    
    
    
    92
    
    
    
    7,359Other Securities
    
    
    3,925
    
    
    
    332
    
    
    
    62
    
    
    
    4,195Equity Securities
    
    
    511
    
    
    
    283
    
    
    
    
    
    
    
    794$
    130,995
    
    
    $
    2,285
    
    
    $
    860
    
    
    $
    132,420
 
 (1)
    
    Collateralized by residential mortgages and guaranteed by U.S. government
sponsored entities. 15




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 4  INVESTMENT SECURITIES (Continued)
  Available for Sale
    
    
    Held to MaturityAmortized
    
    
    Estimated
    
    
    Amortized
    
    
    EstimatedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair Value(In Thousands)Within One Year
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Over One Year Through Five Years
    
    
    
    
    
    
    
    
    
    
    696
    
    
    
    696Over Five Years Through Ten Years
    
    
    16,650
    
    
    
    16,710
    
    
    
    
    
    
    
    Over Ten Years
    
    
    27,255
    
    
    
    27,607
    
    
    
    
    
    
    
    Mortgage-Backed Securities
    
    
    56,957
    
    
    
    58,418
    
    
    
    166
    
    
    
    166Collateralized Mortgage Obligations
    
    
    9,628
    
    
    
    9,840
    
    
    
    
    
    
    
    Equity Securities
    
    
    511
    
    
    
    794
    
    
    
    
    
    
    
    $
    111,001
    
    
    $
    113,369
    
    
    $
    862
    
    
    $
    862
  Holding PeriodLess than 12 Months
    
    
    12 Months or More
    
    
    TotalGross
    
    
    Estimated
    
    
    Number
    
    
    Gross
    
    
    Estimated
    
    
    Number
    
    
    Gross
    
    
    Estimated
    
    
    NumberInvestment Securities
    
    Unrealized
    
    
    Fair
    
    
    of
    
    
    Unrealized
    
    
    Fair
    
    
    of
    
    
    Unrealized
    
    
    Fair
    
    
    ofAvailable for Sale
    
    Losses
    
    
    Value
    
    
    Securities
    
    
    Losses
    
    
    Value
    
    
    Securities
    
    
    Losses
    
    
    Value
    
    
    Securities(In Thousands)March 31, 2010:Mortgage-Backed Securities
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    45
    
    
    $
    4,800
    
    
    
    1
    
    
    $
    45
    
    
    $
    4,800
    
    
    
    1Municipal Bonds
    
    
    2
    
    
    
    313
    
    
    
    1
    
    
    
    34
    
    
    
    839
    
    
    
    1
    
    
    
    36
    
    
    
    1,152
    
    
    
    2U.S. Government Agency
Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162
    
    
    
    14,835
    
    
    
    2
    
    
    
    162
    
    
    
    14,835
    
    
    
    2Other Securities
    
    
    7
    
    
    
    1,993
    
    
    
    2
    
    
    
    36
    
    
    
    964
    
    
    
    1
    
    
    
    43
    
    
    
    2,957
    
    
    
    3$
    9
    
    
    $
    2,306
    
    
    
    3
    
    
    $
    277
    
    
    $
    21,438
    
    
    
    5
    
    
    $
    286
    
    
    $
    23,744
    
    
    
    8December 31, 2009:Mortgage-Backed Securities
    
    $
    144
    
    
    $
    14,584
    
    
    
    3
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    144
    
    
    $
    14,584
    
    
    
    3Municipal Bonds
    
    
    12
    
    
    
    303
    
    
    
    1
    
    
    
    80
    
    
    
    793
    
    
    
    1
    
    
    
    92
    
    
    
    1,096
    
    
    
    2U.S. Government Agency
Securities
    
    
    562
    
    
    
    32,764
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    562
    
    
    
    32,764
    
    
    
    6Other Securities
    
    
    24
    
    
    
    1,976
    
    
    
    2
    
    
    
    39
    
    
    
    961
    
    
    
    1
    
    
    
    62
    
    
    
    2,937
    
    
    
    3$
    742
    
    
    $
    49,627
    
    
    
    12
    
    
    $
    119
    
    
    $
    1,754
    
    
    
    2
    
    
    $
    860
    
    
    $
    51,381
    
    
    
    14
  16




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 4  INVESTMENT SECURITIES (Continued)
   Three Months Ended March 31,2010
    
    
    2009(In Thousands)Gross Realized Gains on Sales of Investment Securities
    
    $
    210
    
    
    $
    1,276Gross Realized Losses on Sales of Investment Securities
    
    
    (105
    )
    
    
    (109
    )Net Realized Gains on Sales of Investment Securities
    
    $
    105
    
    
    $
    1,167Proceeds from Sales of Investment Securities
    
    $
    3,252
    
    
    $
    38,447Tax Expense on Sales of Investment Securities
    
    $
    45
    
    
    $
    491
   17




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 5  LOANS
 Loans Receivable
  March 31,
    
    
    December 31,2010
    
    
    2009(In Thousands)Real Estate Loans:Commercial Property
    
    $
    821,752
    
    
    $
    839,598Construction
    
    
    93,222
    
    
    
    126,350Residential Property
    
    
    71,443
    
    
    
    77,149Total Real Estate Loans
    
    
    986,417
    
    
    
    1,043,097Commercial and Industrial Loans: (1)Commercial Term Loans
    
    
    1,354,793
    
    
    
    1,420,034SBA Loans
    
    
    124,394
    
    
    
    134,521Commercial Lines of Credit
    
    
    104,326
    
    
    
    101,159International Loans
    
    
    44,933
    
    
    
    53,488Total Commercial and Industrial Loans
    
    
    1,628,446
    
    
    
    1,709,202Consumer Loans
    
    
    58,886
    
    
    
    63,303Total Gross Loans
    
    
    2,673,749
    
    
    
    2,815,602Deferred Loan Fees
    
    
    (963
    )
    
    
    (1,552
    )Allowance for Loan Losses
    
    
    (177,820
    )
    
    
    (144,996
    )Loans Receivable, Net
    
    $
    2,494,966
    
    
    $
    2,669,054
 
 (1)
    
    Commercial and industrial loans include owner-occupied property loans of $1.08
billion and $1.15 billion as of March 31, 2010
and December 31, 2009, respectively.  Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
  As of and for the Three Months EndedMarch 31,
    
    
    December 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2009(In Thousands)Allowance for Loan Losses:Balance at Beginning of Period
    
    $
    144,996
    
    
    $
    124,768
    
    
    $
    70,986Actual Charge-Offs
    
    
    (30,114
    )
    
    
    (58,170
    )
    
    
    (12,516
    )Recoveries on Loans Previously Charged Off
    
    
    3,721
    
    
    
    858
    
    
    
    703Net Loan Charge-Offs
    
    
    (26,393
    )
    
    
    (57,312
    )
    
    
    (11,813
    )Provision Charged to Operating Expense
    
    
    59,217
    
    
    
    77,540
    
    
    
    45,770Balance at End of Period
    
    $
    177,820
    
    
    $
    144,996
    
    
    $
    104,943Allowance for Off-Balance Sheet Items:Balance at Beginning of Period
    
    $
    3,876
    
    
    $
    4,416
    
    
    $
    4,096Provision Charged to (Reversal of Charged to) Operating Expense
    
    
    (1,221
    )
    
    
    (540
    )
    
    
    183Balance at End of Period
    
    $
    2,655
    
    
    $
    3,876
    
    
    $
    4,279
 18




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 5  LOANS (Continued)
 Impaired Loans
  Amount
    
    
    Allowance(In Thousands)March 31, 2010:With No Allocated Allowance:Without Charge-Offs
    
    $
    77,334
    
    
    $
    With Charge-Offs
    
    
    97,523
    
    
    
    $
    174,857
    
    
    $
    With Allocated Allowance:Without Charge-Offs
    
    $
    48,786
    
    
    $
    22,632With Charge-Offs
    
    
    31,043
    
    
    
    4,534$
    79,829
    
    
    $
    27,166December 31, 2009:With No Allocated Allowance:Without Charge-Offs
    
    $
    44,055
    
    
    $
    With Charge-Offs
    
    
    84,674
    
    
    
    $
    128,729
    
    
    $
    With Allocated Allowance:Without Charge-Offs
    
    $
    41,476
    
    
    $
    20,413With Charge-Offs
    
    
    30,529
    
    
    
    2,735$
    72,005
    
    
    $
    23,148
  Three Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009(In Thousands)Interest Income That Would Have Been Recognized Had Impaired
Loans Performed in Accordance With Their Original Terms
    
    $
    5,569
    
    
    $
    5,177Less: Interest Income Recognized on Impaired Loans
    
    
    (2,771
    )
    
    
    (1,655
    )Interest Foregone on Impaired Loans
    
    $
    2,798
    
    
    $
    3,522
  19




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 5  LOANS (Continued)
 Non-Performing Assets
  March 31,
    
    
    December 31,2010
    
    
    2009(In Thousands)Non-Accrual Loans
    
    $
    262,232
    
    
    $
    219,000Loans 90 Days or More Past Due and Still Accruing
    
    
    
    
    
    
    67Total Non-Performing Loans
    
    
    262,232
    
    
    
    219,067Other Real Estate Owned
    
    
    22,399
    
    
    
    26,306Total Non-Performing Assets
    
    $
    284,631
    
    
    $
    245,373Troubled Debt Restructurings on Accrual Status
    
    $
    10,041
    
    
    $
    
     20




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 6  INCOME TAXES
    NOTE 7  SHARE-BASED COMPENSATION
 Share-Based Compensation Expense
  Unrecognized Share-Based Compensation Expense
  Unrecognized
    
    
    Average ExpectedExpense
    
    
    Recognition Period(Dollars in Thousands)Stock Option Awards
    
    $
    855
    
    
    1.6 yearsRestricted Stock Awards
    
    
    281
    
    
    3.5 yearsTotal Unrecognized Share-Based Compensation Expense
    
    $
    1,136
    
    
    2.1 years
 21




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 7  SHARE-BASED COMPENSATION (Continued)
 Share-Based Payment Award Activity
  Weighted-
    
    Weighted-
    
    AggregateAverage
    
    Average
    
    IntrinsicNumber
    
    Exercise
    
    Remaining
    
    Value ofof
    
    Price Per
    
    Contractual
    
    In-the-MoneyShares
    
    Share
    
    Life
    
    Options(Dollars in Thousands, Except Per Share Data)Options Outstanding at Beginning of Period
    
    
    1,180,358
    
    
    $
    11.78
    
    
    6.2 years
    
    $
    
    (1)Options Expired
    
    
    (37,243
    )
    
    $
    18.31
    
    
    5.3 yearsOptions Forfeited
    
    
    (5,600
    )
    
    $
    16.68
    
    
    7.0 yearsOptions Outstanding at End of Period
    
    
    1,137,515
    
    
    $
    11.55
    
    
    6.0 years
    
    $
    242
    (2)Options Exercisable at End of Period
    
    
    708,515
    
    
    $
    14.00
    
    
    4.7 years
    
    $
    
    (2)
 
 (1)
    
    Intrinsic value represents the excess of the closing stock price on the
last trading day of the period, which was $1.20 as of December 31, 2009, over the
exercise price, multiplied by the number of options.(2)
    
    Intrinsic value represents the excess of the closing stock price on the last
trading day of the period, which was $2.40 as of March 31, 2010, over the exercise
price, multiplied by the number of options.  Restricted Stock Awards
  Weighted-AverageNumber
    
    Grant Dateof
    
    Fair ValueShares
    
    Per ShareRestricted Stock at Beginning of Period
    
    
    183,400
    
    
    $
    1.87Restricted Stock Forfeited
    
    
    Restricted Stock at End of Period
    
    
    183,400
    
    
    $
    1.87
 NOTE 8  LOSS PER SHARE
  22




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 8  LOSS PER SHARE (Continued)
  Three Months Ended March 31,2010
    
    
    2009(Numerator)
    
    
    (Denominator)
    
    
    
    
    
    
    (Numerator)
    
    
    (Denominator)Weighted-
    
    
    Per
    
    
    
    
    
    
    Weighted-
    
    
    PerNet
    
    
    Average
    
    
    Share
    
    
    Net
    
    
    Average
    
    
    ShareLoss
    
    
    Shares
    
    
    Amount
    
    
    Loss
    
    
    Shares
    
    
    Amount(Dollars in Thousands, Except Per Share Data)Basic EPS
    
    $
    (49,486
    )
    
    
    50,998,990
    
    
    $
    (0.97
    )
    
    $
    (17,196
    )
    
    
    45,891,043
    
    
    $
    (0.37
    )Effect of Dilutive Securities  Options, Warrants and
Unvested Restricted Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted EPS
    
    $
    (49,486
    )
    
    
    50,998,990
    
    
    $
    (0.97
    )
    
    $
    (17,196
    )
    
    
    45,891,043
    
    
    $
    (0.37
    )
  NOTE 9  OFF-BALANCE SHEET COMMITMENTS
   March 31,
    
    
    December 31,2010
    
    
    2009(In Thousands)Commitments to Extend Credit
    
    $
    186,989
    
    
    $
    262,821Standby Letters of Credit
    
    
    17,925
    
    
    
    17,225Commercial Letters of Credit
    
    
    13,221
    
    
    
    13,544Unused Credit Card Lines
    
    
    23,722
    
    
    
    23,408Total Undisbursed Loan Commitments
    
    $
    241,857
    
    
    $
    316,998
 NOTE 10  SEGMENT REPORTING
  23




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 11  LIQUIDITY
 Risks and Uncertainties,
 Hanmi Financial
  Hanmi Bank
   24




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (Continued)
 NOTE 11  LIQUIDITY (Continued)
 .
   NOTE 13  SUBSEQUENT EVENTS
  25




---



##### 



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FORWARD-LOOKING STATEMENTS
 Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
 
    
    failure to continue as a going concern;
    
    failure to maintain adequate levels of capital and liquidity to support our operations;
    
    a significant number of our customers failing to perform under their loans and other
terms of credit agreements;
    
    the effect of regulatory orders we have entered into and potential future supervisory
action against us or Hanmi Bank;
    
    fluctuations in interest rates and a decline in the level of our interest rate spread;
    
    failure to attract or retain deposits;
    
    sources of liquidity available to us and to Hanmi Bank becoming limited or our
potential inability to access sufficient sources of liquidity when needed or the
requirement that we obtain government waivers to do so;
    
    adverse changes in domestic or global financial markets, economic conditions or
business conditions;
    
    regulatory restrictions on Hanmi Banks ability to pay dividends to us and on our
ability to make payments on our obligations;
    
    significant reliance on loans secured by real estate and the associated vulnerability
to downturns in the local real estate market, natural disasters and other variables
impacting the value of real estate;
    
    failure to attract or retain our key employees;
    
    failure to maintain our status as a financial holding company;
    
    adequacy of our allowance for loan losses;
    
    credit quality and the effect of credit quality on our provision for credit losses and
allowance for loan losses;
    
    volatility and disruption in financial, credit and securities markets, and the price of
our common stock;
    
    deterioration in the financial markets that may result in other-than-temporary
impairment charges relating to our securities portfolio;
    
    competition in our primary market areas;
    
    demographic changes in our primary market areas; and
    
    significant government regulations, legislation and potential changes thereto.
 26




---



##### 



Item 2. Managements Discussion and
Analysis of Financial Condition and Results of Operations Item 1A. Risk Factors. Item 1A. Risk Factors Item 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations
 CRITICAL ACCOUNTING POLICIES
 Notes to Consolidated Financial Statements Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations  Critical Accounting Policies
 27




---



##### 



SELECTED FINANCIAL DATA
  As of and for theThree Months EndedMarch 31,2010
    
    2009(Dollars in Thousands, Except Per Share Data)AVERAGE BALANCES:Average Gross Loans, Net (1)
    
    $
    2,765,701
    
    
    $
    3,349,085Average Investment Securities
    
    $
    125,340
    
    
    $
    182,284Average Interest-Earning Assets
    
    $
    3,010,938
    
    
    $
    3,806,186Average Total Assets
    
    $
    3,086,198
    
    
    $
    3,946,727Average Deposits
    
    $
    2,662,960
    
    
    $
    3,202,032Average Borrowings
    
    $
    257,132
    
    
    $
    440,053Average Interest-Bearing Liabilities
    
    $
    2,360,992
    
    
    $
    3,115,332Average Stockholders Equity
    
    $
    137,931
    
    
    $
    263,553Average Tangible Equity (2)
    
    $
    134,679
    
    
    $
    258,775PER SHARE DATA:Earnings (Loss) Per Share  Basic
    
    $
    (0.97
    )
    
    $
    (0.37
    )Earnings (Loss) Per Share  Diluted
    
    $
    (0.97
    )
    
    $
    (0.37
    )Common Shares Outstanding
    
    
    51,182,390
    
    
    
    45,940,967Book Value Per Share (3)
    
    $
    1.97
    
    
    $
    5.40Tangible Book Value Per Share (4)
    
    $
    1.91
    
    
    $
    5.31SELECTED PERFORMANCE RATIOS:Return on Average Assets (5) (6)
    
    
    (6.50
    %)
    
    
    (1.77
    %)Return on Average Stockholders Equity (5) (7)
    
    
    (145.50
    %)
    
    
    (26.46
    %)Return on Average Tangible Equity (5) (8)
    
    
    (149.02
    %)
    
    
    (26.95
    %)Efficiency Ratio (9)
    
    
    76.37
    %
    
    
    57.92
    %Net Interest Spread (10)
    
    
    3.29
    %
    
    
    1.91
    %Net Interest Margin (11)
    
    
    3.69
    %
    
    
    2.50
    %Average Stockholders Equity to Average Total Assets
    
    
    4.47
    %
    
    
    6.68
    %SELECTED CAPITAL RATIOS:(12)Total Risk-Based Capital Ratio:Hanmi Financial
    
    
    7.86
    %
    
    
    10.57
    %Hanmi Bank
    
    
    7.81
    %
    
    
    10.50
    %Tier 1 Risk-Based Capital Ratio:Hanmi Financial
    
    
    4.80
    %
    
    
    9.29
    %Hanmi Bank
    
    
    6.49
    %
    
    
    9.22
    %Tier 1 Leverage Ratio:Hanmi Financial
    
    
    4.20
    %
    
    
    8.16
    %Hanmi Bank
    
    
    5.68
    %
    
    
    8.10
    %SELECTED ASSET QUALITY RATIOS:Non-Performing Loans to Total Gross Loans (13)
    
    
    9.77
    %
    
    
    4.71
    %Non-Performing Assets to Total Assets (14)
    
    
    9.43
    %
    
    
    4.06
    %Net Loan Charge-Offs to Average Total Gross Loans (15)
    
    
    3.87
    %
    
    
    1.43
    %Allowance for Loan Losses to Total Gross Loans
    
    
    6.63
    %
    
    
    3.16
    %Allowance for Loan Losses to Non-Performing Loans
    
    
    67.81
    %
    
    
    67.13
    %
 
 (1)
    
    Loans are net of deferred fees and related direct costs.(2)
    
    Average tangible equity is calculated by subtracting average other intangible
assets from average stockholders equity. See Non-GAAP Financial Measures.(3)
    
    Total stockholders equity divided by common shares outstanding.(4)
    
    Tangible equity divided by common shares outstanding. See Non-GAAP Financial Measures.(5)
    
    Calculation based upon annualized net income.(6)
    
    Net income divided by average total assets.(7)
    
    Net income divided by average stockholders equity.(8)
    
    Net income divided by average tangible equity. See Non-GAAP Financial Measures.(9)
    
    Total non-interest expenses divided by the sum of net interest income before provision for credit losses and total non-interest income.(10)
    
    Average yield earned on interest-earning assets less average rate paid on
interest-bearing liabilities. Computed on a tax-equivalent basis using an effective marginal
rate of 35 percent.(11)
    
    Net interest income before provision for credit losses divided by average
interest-earning assets. Computed on a tax-equivalent basis using in effective marginal rate
of 35 percent.(12)
    
    The required ratios for a well-capitalized institution, as defined by
regulations of the Board of Governors of the Federal Reserve System, are 10 percent for the
Total Risk-Based Capital Ratio (total capital divided by total risk-weighted assets); 6
percent for the Tier 1 Risk-Based Capital Ratio (Tier 1 capital divided by total risk-weighted
assets); and 5 percent for the Tier 1 Leverage Ratio (Tier 1 capital divided by average total
assets).(13)
    
    Non-performing loans consist of non-accrual loans and loans past due 90 days or more and still accruing interest.(14)
    
    Non-performing assets consist of non-performing loans (see footnote (13) above) and other real estate owned.(15)
    
    Calculation based upon annualized net loan charge-offs. 28




---



##### 



Non-GAAP Financial Measures
 Return on Average Tangible Equity
   Three Months EndedMarch 31,2010
    
    
    2009(Dollars in Thousands)Average Stockholders Equity
    
    $
    137,931
    
    
    $
    263,553Less Average Other Intangible Assets
    
    
    (3,252
    )
    
    
    (4,778
    )Average Tangible Equity
    
    $
    134,679
    
    
    $
    258,775Return on Average Stockholders Equity
    
    
    (145.50
    %)
    
    
    (26.46
    %)Effect of Average Other Intangible Assets
    
    
    (3.52
    %)
    
    
    (0.49
    %)Return on Average Tangible Equity
    
    
    (149.02
    %)
    
    
    (26.95
    %)
 Tangible Book Value Per Share
   March 31,2010
    
    
    2009(Dollars in Thousands,Except Per Share Data)Total Stockholders Equity
    
    $
    101,022
    
    
    $
    248,243Less Other Intangible Assets
    
    
    (3,055
    )
    
    
    (4,521
    )Tangible Equity
    
    $
    97,967
    
    
    $
    243,722Book Value Per Share
    
    $
    1.97
    
    
    $
    5.40Effect of Other Intangible Assets
    
    
    (0.06
    )
    
    
    (0.09
    )Tangible Book Value Per Share
    
    $
    1.91
    
    
    $
    5.31
 29




---



##### 



EXECUTIVE OVERVIEW
  Financial Condition  Allowance for Loan Losses
and Allowance for Off-Balance Sheet Items
   30




---



##### 



Outlook for 2010
     RESULTS OF OPERATIONS
 Net Interest Income Before Provision for Credit Losses
   31




---



##### 



Three Months EndedMarch 31, 2010
    
    
    March 31, 2009Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in Thousands)ASSETSInterest-Earning Assets:Gross Loans, Net (1)
    
    $
    2,765,701
    
    
    $
    36,695
    
    
    
    5.38
    %
    
    $
    3,349,085
    
    
    $
    45,085
    
    
    
    5.46
    %Municipal Securities (2)
    
    
    7,549
    
    
    
    118
    
    
    
    6.25
    %
    
    
    58,886
    
    
    
    989
    
    
    
    6.72
    %Obligations of Other U.S. Government Agencies
    
    
    32,120
    
    
    
    383
    
    
    
    4.77
    %
    
    
    9,578
    
    
    
    96
    
    
    
    4.01
    %Other Debt Securities
    
    
    85,671
    
    
    
    701
    
    
    
    3.27
    %
    
    
    113,820
    
    
    
    1,254
    
    
    
    4.41
    %Equity Securities
    
    
    39,369
    
    
    
    125
    
    
    
    1.27
    %
    
    
    41,727
    
    
    
    153
    
    
    
    1.47
    %Federal Funds Sold
    
    
    14,118
    
    
    
    17
    
    
    
    0.48
    %
    
    
    94,585
    
    
    
    82
    
    
    
    0.35
    %Term Federal Funds Sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    138,344
    
    
    
    700
    
    
    
    2.02
    %Interest-Earning Deposits
    
    
    66,410
    
    
    
    55
    
    
    
    0.33
    %
    
    
    161
    
    
    
    2
    
    
    
    4.97
    %Total Interest-Earning Assets
    
    
    3,010,938
    
    
    
    38,094
    
    
    
    5.13
    %
    
    
    3,806,186
    
    
    
    48,361
    
    
    
    5.15
    %Noninterest-Earning Assets:Cash and Cash Equivalents
    
    
    67,157
    
    
    
    
    
    
    
    
    
    
    
    84,054Allowance for Loan Losses
    
    
    (157,296
    )
    
    
    
    
    
    
    
    
    
    
    (72,583
    )Other Assets
    
    
    165,399
    
    
    
    
    
    
    
    
    
    
    
    129,070Total Noninterest-Earning Assets
    
    
    75,260
    
    
    
    
    
    
    
    
    
    
    
    140,541TOTAL ASSETS
    
    $
    3,086,198
    
    
    
    
    
    
    
    
    
    
    $
    3,946,727LIABILITIES AND STOCKHOLDERS EQUITYInterest-Bearing Liabilities:Deposits:Savings
    
    $
    115,625
    
    
    
    824
    
    
    
    2.89
    %
    
    $
    82,029
    
    
    
    505
    
    
    
    2.50
    %Money Market Checking and NOW Accounts
    
    
    558,916
    
    
    
    1,622
    
    
    
    1.18
    %
    
    
    343,354
    
    
    
    1,854
    
    
    
    2.19
    %Time Deposits of $100,000 or More
    
    
    924,055
    
    
    
    4,677
    
    
    
    2.05
    %
    
    
    1,078,650
    
    
    
    10,322
    
    
    
    3.88
    %Other Time Deposits
    
    
    505,264
    
    
    
    2,581
    
    
    
    2.07
    %
    
    
    1,171,246
    
    
    
    10,104
    
    
    
    3.50
    %Federal Home Loan Bank Advances
    
    
    173,062
    
    
    
    346
    
    
    
    0.81
    %
    
    
    356,190
    
    
    
    1,112
    
    
    
    1.27
    %Other Borrowings
    
    
    1,664
    
    
    
    
    
    
    
    
    
    
    
    1,457
    
    
    
    
    
    
    
    Junior Subordinated Debentures
    
    
    82,406
    
    
    
    669
    
    
    
    3.29
    %
    
    
    82,406
    
    
    
    988
    
    
    
    4.86
    %Total Interest-Bearing Liabilities
    
    
    2,360,992
    
    
    
    10,719
    
    
    
    1.84
    %
    
    
    3,115,332
    
    
    
    24,885
    
    
    
    3.24
    %Noninterest-Bearing Liabilities:Demand Deposits
    
    
    559,100
    
    
    
    
    
    
    
    
    
    
    
    526,753Other Liabilities
    
    
    28,175
    
    
    
    
    
    
    
    
    
    
    
    41,089Total Noninterest-Bearing Liabilities
    
    
    587,275
    
    
    
    
    
    
    
    
    
    
    
    567,842Total Liabilities
    
    
    2,948,267
    
    
    
    
    
    
    
    
    
    
    
    3,683,174Stockholders Equity
    
    
    137,931
    
    
    
    
    
    
    
    
    
    
    
    263,553TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,086,198
    
    
    
    
    
    
    
    
    
    
    $
    3,946,727NET INTEREST INCOME
    
    
    
    
    
    $
    27,375
    
    
    
    
    
    
    
    
    
    
    $
    23,476NET INTEREST SPREAD(3)
    
    
    
    
    
    
    
    
    
    
    3.29
    %
    
    
    
    
    
    
    
    
    
    
    1.91
    %NET INTEREST MARGIN(4)
    
    
    
    
    
    
    
    
    
    
    3.69
    %
    
    
    
    
    
    
    
    
    
    
    2.50
    %
 
 (1)
    
    Loans are net of deferred fees and related direct costs, but excluding the allowance
for loan losses. Non-accrual loans are included in the average loan balance. Loan fees have
been included in the calculation of interest income. Loan fees were $450,000 and $391,000 for
the three months ended March 31, 2010 and 2009, respectively.(2)
    
    Computed on a tax-equivalent basis using an effective marginal rate of 35 percent.(3)
    
    Represents the average rate earned on interest-earning assets less the average rate
paid on interest-bearing liabilities.(4)
    
    Represents annualized net interest income as a percentage of average
interest-earning assets. 32




---



##### 



Three Months Ended March 31, 2010 vs.Three Months Ended March 31, 2009Increases (Decreases) Due to Change inVolume
    
    
    Rate
    
    
    Total(In Thousands)Interest and Dividend Income:Gross Loans, Net
    
    $
    (7,749
    )
    
    $
    (641
    )
    
    $
    (8,390
    )Municipal Securities
    
    
    (806
    )
    
    
    (65
    )
    
    
    (871
    )Obligations of Other U.S. Government Agencies
    
    
    266
    
    
    
    21
    
    
    
    287Other Debt Securities
    
    
    (271
    )
    
    
    (282
    )
    
    
    (553
    )Equity Securities
    
    
    (8
    )
    
    
    (20
    )
    
    
    (28
    )Federal Funds Sold
    
    
    (89
    )
    
    
    24
    
    
    
    (65
    )Term Federal Funds Sold
    
    
    (350
    )
    
    
    (350
    )
    
    
    (700
    )Interest-Earning Deposits
    
    
    57
    
    
    
    (4
    )
    
    
    53Total Interest and Dividend Income
    
    
    (8,950
    )
    
    
    (1,317
    )
    
    
    (10,267
    )Interest Expense:Savings
    
    
    230
    
    
    
    89
    
    
    
    319Money Market Checking and NOW Accounts
    
    
    854
    
    
    
    (1,086
    )
    
    
    (232
    )Time Deposits of $100,000 or More
    
    
    (1,316
    )
    
    
    (4,329
    )
    
    
    (5,645
    )Other Time Deposits
    
    
    (4,381
    )
    
    
    (3,142
    )
    
    
    (7,523
    )Federal Home Loan Bank Advances
    
    
    (451
    )
    
    
    (315
    )
    
    
    (766
    )Junior Subordinated Debentures
    
    
    
    
    
    
    (319
    )
    
    
    (319
    )Total Interest Expense
    
    
    (5,064
    )
    
    
    (9,102
    )
    
    
    (14,166
    )Change in Net Interest Income
    
    $
    (3,886
    )
    
    $
    7,785
    
    
    $
    3,899
   33




---



##### 



Provision for Credit Losses
 Non-Performing Assets Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
 Non-Interest Income
  Three Months EndedMarch 31,
    
    
    Increase (Decrease)2010
    
    
    2009
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Service Charges on Deposit Accounts
    
    $
    3,726
    
    
    $
    4,315
    
    
    $
    (589
    )
    
    
    (13.7
    %)Insurance Commissions
    
    
    1,278
    
    
    
    1,182
    
    
    
    96
    
    
    
    8.1
    %Remittance Fees
    
    
    462
    
    
    
    523
    
    
    
    (61
    )
    
    
    (11.7
    %)Other Service Charges and Fees
    
    
    412
    
    
    
    483
    
    
    
    (71
    )
    
    
    (14.7
    %)Trade Finance Fees
    
    
    351
    
    
    
    506
    
    
    
    (155
    )
    
    
    (30.6
    %)Bank-Owned Life Insurance Income
    
    
    231
    
    
    
    234
    
    
    
    (3
    )
    
    
    (1.3
    %)Net Gain on Sales of Investment Securities
    
    
    105
    
    
    
    1,167
    
    
    
    (1,062
    )
    
    
    (91.0
    %)Net Gain on Sales of Loans
    
    
    
    
    
    
    2
    
    
    
    (2
    )
    
    
    (100.0
    %)Other Operating Income
    
    
    440
    
    
    
    66
    
    
    
    374
    
    
    
    566.7
    %Total Non-Interest Income
    
    $
    7,005
    
    
    $
    8,478
    
    
    $
    (1,473
    )
    
    
    (17.4
    %)
    34




---



##### 



Non-Interest Expense
  Three Months EndedMarch 31,
    
    
    Increase (Decrease)2010
    
    
    2009
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Salaries and Employee Benefits
    
    $
    8,786
    
    
    $
    7,503
    
    
    $
    1,283
    
    
    
    17.1
    %Other Real Estate Owned Expense
    
    
    5,700
    
    
    
    143
    
    
    
    5,557
    
    
    
    3,886.0
    %Occupancy and Equipment
    
    
    2,725
    
    
    
    2,884
    
    
    
    (159
    )
    
    
    (5.5
    %)Deposit Insurance Premiums and Regulatory Assessments
    
    
    2,224
    
    
    
    1,490
    
    
    
    734
    
    
    
    49.3
    %Data Processing
    
    
    1,499
    
    
    
    1,536
    
    
    
    (37
    )
    
    
    (2.4
    %)Professional Fees
    
    
    1,066
    
    
    
    616
    
    
    
    450
    
    
    
    73.1
    %Advertising and Promotion
    
    
    535
    
    
    
    569
    
    
    
    (34
    )
    
    
    (6.0
    %)Supplies and Communications
    
    
    517
    
    
    
    570
    
    
    
    (53
    )
    
    
    (9.3
    %)Amortization of Other Intangible Assets
    
    
    328
    
    
    
    429
    
    
    
    (101
    )
    
    
    (23.5
    %)Loan-Related Expense
    
    
    307
    
    
    
    181
    
    
    
    126
    
    
    
    69.6
    %Other Operating Expenses
    
    
    2,537
    
    
    
    2,429
    
    
    
    108
    
    
    
    4.4
    %Total Non-Interest Expense
    
    $
    26,224
    
    
    $
    18,350
    
    
    $
    7,874
    
    
    
    42.9
    %
    35




---



##### 



Benefit for Income Taxes
  FINANCIAL CONDITION
 Investment Portfolio
     March 31, 2010
    
    
    December 31, 2009Estimated
    
    
    Unrealized
    
    
    
    
    
    
    Estimated
    
    
    UnrealizedAmortized
    
    
    Fair
    
    
    Gain
    
    
    Amortized
    
    
    Fair
    
    
    GainCost
    
    
    Value
    
    
    (Loss)
    
    
    Cost
    
    
    Value
    
    
    (Loss)(In Thousands)Held to Maturity:Municipal Bonds
    
    $
    696
    
    
    $
    696
    
    
    $
    
    
    
    $
    696
    
    
    $
    696
    
    
    $
    Mortgage-Backed Securities (1)
    
    
    166
    
    
    
    166
    
    
    
    
    
    
    
    173
    
    
    
    175
    
    
    
    2Total Held to Maturity
    
    $
    862
    
    
    $
    862
    
    
    $
    
    
    
    $
    869
    
    
    $
    871
    
    
    $
    2Available for Sale:Mortgage-Backed Securities (1)
    
    $
    56,957
    
    
    $
    58,418
    
    
    $
    1,460
    
    
    $
    65,218
    
    
    $
    66,332
    
    
    $
    1,114U.S. Government Agency Securities
    
    
    24,996
    
    
    
    24,850
    
    
    
    (146
    )
    
    
    33,325
    
    
    
    32,763
    
    
    
    (562
    )Collateralized Mortgage Obligations
(1)
    
    
    9,628
    
    
    
    9,840
    
    
    
    212
    
    
    
    12,520
    
    
    
    12,789
    
    
    
    269Asset-Backed Securities
    
    
    7,848
    
    
    
    8,010
    
    
    
    163
    
    
    
    8,127
    
    
    
    8,188
    
    
    
    61Municipal Bonds
    
    
    6,831
    
    
    
    6,937
    
    
    
    106
    
    
    
    7,369
    
    
    
    7,359
    
    
    
    (10
    )Other Securities
    
    
    4,230
    
    
    
    4,520
    
    
    
    290
    
    
    
    3,925
    
    
    
    4,195
    
    
    
    270Equity Securities
    
    
    511
    
    
    
    794
    
    
    
    283
    
    
    
    511
    
    
    
    794
    
    
    
    283Total Available for Sale
    
    $
    111,001
    
    
    $
    113,369
    
    
    $
    2,368
    
    
    $
    130,995
    
    
    $
    132,420
    
    
    $
    1,425
 
 (1)
    
    Collateralized by residential mortgages and guaranteed by U.S. government sponsored
entities. 36




---



##### 



Available for Sale
    
    
    Held to MaturityEstimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value(In Thousands)Within One Year
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Over One Year Through Five Years
    
    
    
    
    
    
    
    
    
    
    696
    
    
    
    696Over Five Years Through Ten Years
    
    
    16,650
    
    
    
    16,710
    
    
    
    
    
    
    
    Over Ten Years
    
    
    27,255
    
    
    
    27,607
    
    
    
    
    
    
    
    Mortgage-Backed Securities
    
    
    56,957
    
    
    
    58,418
    
    
    
    166
    
    
    
    166Collateralized Mortgage Obligations
    
    
    9,628
    
    
    
    9,840
    
    
    
    
    
    
    
    Equity Securities
    
    
    511
    
    
    
    794
    
    
    
    
    
    
    
    $
    111,001
    
    
    $
    113,369
    
    
    $
    862
    
    
    $
    862
  Holding PeriodLess than 12 Months
    
    
    12 Months or More
    
    
    TotalGross
    
    
    Estimated
    
    
    Number
    
    
    Gross
    
    
    Estimated
    
    
    Number
    
    
    Gross
    
    
    Estimated
    
    
    NumberInvestment Securities
    
    Unrealized
    
    
    Fair
    
    
    of
    
    
    Unrealized
    
    
    Fair
    
    
    of
    
    
    Unrealized
    
    
    Fair
    
    
    ofAvailable for Sale
    
    Losses
    
    
    Value
    
    
    Securities
    
    
    Losses
    
    
    Value
    
    
    Securities
    
    
    Losses
    
    
    Value
    
    
    Securities(In Thousands)March 31, 2010:Mortgage-Backed Securities
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    45
    
    
    $
    4,800
    
    
    
    1
    
    
    $
    45
    
    
    $
    4,800
    
    
    
    1Municipal Bonds
    
    
    2
    
    
    
    313
    
    
    
    1
    
    
    
    34
    
    
    
    839
    
    
    
    1
    
    
    
    36
    
    
    
    1,152
    
    
    
    2U.S. Government Agency
Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162
    
    
    
    14,835
    
    
    
    2
    
    
    
    162
    
    
    
    14,835
    
    
    
    2Other Securities
    
    
    7
    
    
    
    1,993
    
    
    
    2
    
    
    
    36
    
    
    
    964
    
    
    
    1
    
    
    
    43
    
    
    
    2,957
    
    
    
    3$
    9
    
    
    $
    2,306
    
    
    
    3
    
    
    $
    277
    
    
    $
    21,438
    
    
    
    5
    
    
    $
    286
    
    
    $
    23,744
    
    
    
    8December 31, 2009:Mortgage-Backed Securities
    
    $
    144
    
    
    $
    14,584
    
    
    
    3
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    144
    
    
    $
    14,584
    
    
    
    3Municipal Bonds
    
    
    12
    
    
    
    303
    
    
    
    1
    
    
    
    80
    
    
    
    793
    
    
    
    1
    
    
    
    92
    
    
    
    1,096
    
    
    
    2U.S. Government Agency
Securities
    
    
    562
    
    
    
    32,764
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    562
    
    
    
    32,764
    
    
    
    6Other Securities
    
    
    24
    
    
    
    1,976
    
    
    
    2
    
    
    
    39
    
    
    
    961
    
    
    
    1
    
    
    
    63
    
    
    
    2,937
    
    
    
    3$
    742
    
    
    $
    49,627
    
    
    
    12
    
    
    $
    119
    
    
    $
    1,754
    
    
    
    2
    
    
    $
    861
    
    
    $
    51,381
    
    
    
    14
   37




---



##### 



Loan Portfolio
  March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2010
    
    
    2009
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Real Estate Loans:Commercial Property
    
    $
    821,752
    
    
    $
    839,598
    
    
    $
    (17,846
    )
    
    
    (2.1
    %)Construction
    
    
    93,222
    
    
    
    126,350
    
    
    
    (33,128
    )
    
    
    (26.2
    %)Residential Property
    
    
    71,443
    
    
    
    77,149
    
    
    
    (5,706
    )
    
    
    (7.4
    %)Total Real Estate Loans
    
    
    986,417
    
    
    
    1,043,097
    
    
    
    (56,680
    )
    
    
    (5.4
    %)Commercial and Industrial Loans: (1)Commercial Term Loans (2)
    
    
    1,359,477
    
    
    
    1,420,034
    
    
    
    (60,557
    )
    
    
    (4.3
    %)Commercial Lines of Credit
    
    
    104,326
    
    
    
    101,159
    
    
    
    3,167
    
    
    
    3.1
    %SBA Loans (3)
    
    
    129,814
    
    
    
    139,531
    
    
    
    (9,717
    )
    
    
    (7.0
    %)International Loans
    
    
    44,933
    
    
    
    53,488
    
    
    
    (8,555
    )
    
    
    (16.0
    %)Total Commercial and Industrial Loans
    
    
    1,638,550
    
    
    
    1,714,212
    
    
    
    (75,662
    )
    
    
    (4.4
    %)Consumer Loans
    
    
    58,886
    
    
    
    63,303
    
    
    
    (4,417
    )
    
    
    (7.0
    %)Total Loans  Gross
    
    
    2,683,853
    
    
    
    2,820,612
    
    
    
    (136,759
    )
    
    
    (4.8
    %)Deferred Loan Fees
    
    
    (963
    )
    
    
    (1,552
    )
    
    
    589
    
    
    
    (38.0
    %)Allowance for Loan Losses
    
    
    (177,820
    )
    
    
    (144,996
    )
    
    
    (32,824
    )
    
    
    22.6
    %Net Loans Receivable
    
    $
    2,505,070
    
    
    $
    2,674,064
    
    
    $
    (168,994
    )
    
    
    (6.3
    %)
 
 (1)
    
    Commercial and industrial loans include owner-occupied property loans of $1.08 billion and $1.15 billion as of March 31, 2010 and December 31, 2009, respectively.(2)
    
    Includes loans held for sale, at the lower of cost or fair value, of $4.7
million and $0 as of March 31, 2010 and December 31, 2009, respectively.(3)
    
    Includes loans held for sale, at the lower of cost or fair value, of $5.4
million and $5.0 million as of March 31, 2010 and December 31, 2009, respectively.    38




---



##### 



Balance as of
    
    
    Percentage of TotalIndustry
    
    March 31, 2010
    
    
    Gross Loans Outstanding(In Thousands)Lessors of Non-Residential Buildings
    
    $
    406,877
    
    
    
    15.2
    %Accommodation/Hospitality
    
    $
    403,507
    
    
    
    15.0
    %Gasoline Stations
    
    $
    312,221
    
    
    
    11.6
    %
  Non-Performing Assets
    39




---



##### 



March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2010
    
    
    2009
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Non-Accrual Loans
    
    $
    262,232
    
    
    $
    219,000
    
    
    $
    43,232
    
    
    
    19.7
    %Loans 90 Days or More Past Due and Still Accruing
    
    
    
    
    
    
    67
    
    
    
    (67
    )
    
    
    (100.0
    %)Total Non-Performing Loans
    
    
    262,232
    
    
    
    219,067
    
    
    
    43,165
    
    
    
    19.7
    %Other Real Estate Owned
    
    
    22,399
    
    
    
    26,306
    
    
    
    (3,907
    )
    
    
    (14.9
    %)Total Non-Performing Assets
    
    $
    284,631
    
    
    $
    245,373
    
    
    $
    39,258
    
    
    
    16.0
    %Troubled Debt Restructurings on Accrual Status
    
    $
    10,041
    
    
    $
    
    
    
    $
    10,041
    
    
    
    
      40




---



##### 



March 31,
    
    
    December 31,2010
    
    
    2009(In Thousands)Recorded Investment With Related Allowance
    
    $
    79,829
    
    
    $
    91,371Recorded Investment With No Related Allowance
    
    
    174,856
    
    
    
    109,363Allowance on Impaired Loans
    
    
    (27,166
    )
    
    
    (23,148
    )Net Recorded Investment in Impaired Loans
    
    $
    227,519
    
    
    $
    177,586
  Three Months Ended March 31,2010
    
    
    2009(In Thousands)Interest Income That Would Have Been Recognized Had Impaired
Loans Performed in Accordance With Their Original Terms
    
    $
    5,569
    
    
    $
    5,177Less: Interest Income Recognized on Impaired Loans
    
    
    (2,771
    )
    
    
    (1,655
    )Interest Foregone on Impaired Loans
    
    $
    2,798
    
    
    $
    3,522
  Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
   41




---



##### 




    
    changes in lending policies and procedures, including underwriting standards and
collection, charge-offs,
and recovery practice;
    
    changes in national and local economic and business conditions and developments,
including the condition
of various market segments;
    
    changes in the nature and volume of the portfolio;
    
    changes in the experience, ability, and depth of lending management and staff;
    
    changes in the trend of the volume and severity of past due and classified loans,
and trends in the volume
of non-accrual loans, troubled debt restructurings, charge-offs and other loan
modifications;
    
    changes in the quality of the Banks loan review system and the degree of oversight
by the Board of
Directors;
    
    the existence and effect of any concentrations of credit, and changes in the level
of such concentrations;
    
    transfer risk on cross-border lending activities;
    
    the effect of external factors such as competition and legal and regulatory
requirements as well as
declining collateral values on the level of estimated credit losses in the Banks current
portfolio.
 42




---



##### 



As of and for the Three Months EndedMarch 31,
    
    
    December 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2009(Dollars in Thousands)Allowance for Loan Losses:Balance at Beginning of Period
    
    $
    144,996
    
    
    $
    124,768
    
    
    $
    70,986Actual Charge-Offs
    
    
    (30,114
    )
    
    
    (58,170
    )
    
    
    (12,516
    )Recoveries on Loans Previously Charged Off
    
    
    3,721
    
    
    
    858
    
    
    
    703Net Loan Charge-Offs
    
    
    (26,393
    )
    
    
    (57,312
    )
    
    
    (11,813
    )Provision Charged to Operating Expenses
    
    
    59,217
    
    
    
    77,540
    
    
    
    45,770Balance at End of Period
    
    $
    177,820
    
    
    $
    144,996
    
    
    $
    104,943Allowance for Off-Balance Sheet Items:Balance at Beginning of Period
    
    $
    3,876
    
    
    $
    4,416
    
    
    $
    4,096Provision Charged to Operating Expenses
    
    
    (1,221
    )
    
    
    (540
    )
    
    
    183Balance at End of Period
    
    $
    2,655
    
    
    $
    3,876
    
    
    $
    4,279Ratios:Net Loan Charge-Offs to Average Total Gross Loans (1)
    
    
    3.87
    %
    
    
    7.77
    %
    
    
    1.43
    %Net Loan Charge-Offs to Total Gross Loans (1)
    
    
    3.99
    %
    
    
    8.06
    %
    
    
    1.44
    %Allowance for Loan Losses to Average Total Gross Loans
    
    
    6.43
    %
    
    
    4.95
    %
    
    
    3.13
    %Allowance for Loan Losses to Total Gross Loans
    
    
    6.63
    %
    
    
    5.14
    %
    
    
    3.16
    %Net Loan Charge-Offs to Allowance for Loan Losses (1)
    
    
    60.20
    %
    
    
    156.82
    %
    
    
    45.65
    %Net Loan Charge-Offs to Provision Charged to Operating Expenses
    
    
    44.57
    %
    
    
    73.91
    %
    
    
    25.81
    %Allowance for Loan Losses to Non-Performing Loans
    
    
    67.81
    %
    
    
    66.19
    %
    
    
    67.13
    %Balances:Average Total Gross Loans Outstanding During Period
    
    $
    2,766,965
    
    
    $
    2,926,357
    
    
    $
    3,350,343Total Gross Loans Outstanding at End of Period
    
    $
    2,683,853
    
    
    $
    2,820,612
    
    
    $
    3,319,722Non-Performing Loans at End of Period
    
    $
    262,232
    
    
    $
    219,067
    
    
    $
    156,331
 
 (1)
    
    Net loan charge-offs are annualized to calculate the ratios.   43




---



##### 



Deposits
  March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2010
    
    
    2009
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Demand  Noninterest-Bearing
    
    $
    575,015
    
    
    $
    556,306
    
    
    $
    18,709
    
    
    
    3.4
    %Interest-Bearing:Savings
    
    
    121,041
    
    
    
    111,172
    
    
    
    9,869
    
    
    
    8.9
    %Money Market Checking and NOW Accounts
    
    
    488,366
    
    
    
    685,858
    
    
    
    (197,492
    )
    
    
    (28.8
    %)Time Deposits of $100,000 or More
    
    
    1,048,688
    
    
    
    815,190
    
    
    
    233,498
    
    
    
    28.6
    %Other Time Deposits
    
    
    417,170
    
    
    
    580,801
    
    
    
    (163,631
    )
    
    
    (28.2
    %)Total Deposits
    
    $
    2,650,280
    
    
    $
    2,749,327
    
    
    $
    (99,047
    )
    
    
    (3.6
    %)
  44




---



##### 



Federal Home Loan Bank Advances and Other Borrowings
  Junior Subordinated Debentures
  45




---



##### 



INTEREST RATE RISK MANAGEMENT
   AfterThree
    
    
    After OneMonths
    
    
    Year ButWithin
    
    
    But
    
    
    Within
    
    
    After
    
    
    Non-Three
    
    
    Within
    
    
    Five
    
    
    Five
    
    
    Interest-Months
    
    
    One Year
    
    
    Years
    
    
    Years
    
    
    Sensitive
    
    
    Total(Dollars in Thousands)ASSETSCash and Due From Banks
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    59,677
    
    
    $
    59,677Interest-Bearing Deposits in Other Banks
    
    
    139,540
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139,540Investment Securities:Fixed Rate
    
    
    2,505
    
    
    
    5,730
    
    
    
    27,035
    
    
    
    65,924
    
    
    
    
    
    
    
    101,193Floating Rate
    
    
    67
    
    
    
    362
    
    
    
    3,933
    
    
    
    8,675
    
    
    
    
    
    
    
    13,038Loans:Fixed Rate
    
    
    94,378
    
    
    
    229,718
    
    
    
    552,572
    
    
    
    4,936
    
    
    
    
    
    
    
    881,604Floating Rate
    
    
    1,492,774
    
    
    
    22,781
    
    
    
    20,837
    
    
    
    3,625
    
    
    
    
    
    
    
    1,540,017Non-Accrual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262,232
    
    
    
    262,232Deferred Loan Fees and Allowance for Loan Losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (178,783
    )
    
    
    (178,783
    )Investment in Federal Home Loan Bank Stock and
Federal
Reserve Bank Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,575
    
    
    
    
    
    
    
    38,575Other Assets
    
    
    
    
    
    
    26,639
    
    
    
    
    
    
    
    7,505
    
    
    
    127,064
    
    
    
    161,208Total Assets
    
    $
    1,729,264
    
    
    $
    285,230
    
    
    $
    604,377
    
    
    $
    129,240
    
    
    $
    270,190
    
    
    $
    3,018,301LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Demand  Noninterest-Bearing
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    575,015
    
    
    $
    575,015Savings
    
    
    11,995
    
    
    
    28,761
    
    
    
    58,602
    
    
    
    21,683
    
    
    
    
    
    
    
    121,041Money Market Checking and NOW Accounts
    
    
    67,392
    
    
    
    140,335
    
    
    
    197,917
    
    
    
    82,722
    
    
    
    
    
    
    
    488,366Time Deposits:Fixed Rate
    
    
    477,804
    
    
    
    797,340
    
    
    
    190,657
    
    
    
    
    
    
    
    
    
    
    
    1,465,801Floating Rate
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58Federal Home Loan Bank Advances
    
    
    150,205
    
    
    
    634
    
    
    
    3,058
    
    
    
    
    
    
    
    
    
    
    
    153,897Other Borrowings
    
    
    4,428
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,428Junior Subordinated Debentures
    
    
    82,406
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,406Other Liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,267
    
    
    
    26,267Stockholders Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,022
    
    
    
    101,022Total Liabilities and Stockholders Equity
    
    $
    794,288
    
    
    $
    967,070
    
    
    $
    450,234
    
    
    $
    104,405
    
    
    $
    702,304
    
    
    $
    3,018,301Repricing Gap
    
    $
    934,977
    
    
    $
    (681,840
    )
    
    $
    154,142
    
    
    $
    24,835
    
    
    $
    (432,114
    )
    
    $
    Cumulative Repricing Gap
    
    $
    934,977
    
    
    $
    253,137
    
    
    $
    407,279
    
    
    $
    432,114
    
    
    $
    
    
    
    $
    Cumulative Repricing Gap as a Percentage of
Total Assets
    
    
    30.98
    %
    
    
    8.39
    %
    
    
    28.97
    %
    
    
    14.32
    %
    
    
    Cumulative Repricing Gap as a Percentage of
Interest-Earning Assets
    
    
    34.45
    %
    
    
    9.33
    %
    
    
    32.22
    %
    
    
    15.92
    %
    
    
    
  46




---



##### 



Less Than Three Months
    
    Less Than Twelve MonthsMarch 31,
    
    December 31,
    
    March 31,
    
    December 31,2010
    
    2009
    
    2010
    
    2009(Dollars in Thousands)Cumulative Repricing Gap
    
    $
    934,977
    
    
    $
    889,466
    
    
    $
    253,137
    
    
    $
    276,131Cumulative Repricing Gap as a Percentage of Total Assets
    
    
    30.98
    %
    
    
    28.12
    %
    
    
    8.39
    %
    
    
    8.73
    %Cumulative Repricing Gap as a Percentage of Interest-Earning Assets
    
    
    34.45
    %
    
    
    30.97
    %
    
    
    9.33
    %
    
    
    9.61
    %
   Rate Shock TablePercentage Changes
    
    Change in AmountChange in
    
    Net
    
    Economic
    
    Net
    
    EconomicInterest
    
    Interest
    
    Value of
    
    Interest
    
    Value ofRate
    
    Income
    
    Equity
    
    Income
    
    Equity(Dollars in Thousands)200
    %
    
    
    18.54
    %
    
    
    12.31
    %
    
    $
    22,723
    
    
    $
    9,792100
    %
    
    
    9.47
    %
    
    
    6.23
    %
    
    $
    11,605
    
    
    $
    4,955(100
    %)
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )(200
    %)
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )
 
 (1)
    
    The table above only reflects the impact of upward shocks due to the fact that a
downward parallel shock of 100 basis points or more is not possible given that some
short-term rates are currently less than one percent.  47




---



##### 



CAPITAL RESOURCES AND LIQUIDITY
 Capital Resources
  Notes to Consolidated Financial Statements, Note 2
 Regulatory Matters and Going Concern Consideration.
 Ratio of Tangible ShareholdersDate
    
    Equity to Total Tangible AssetsBy December 31, 2009
    
    Not Less Than 7.0 PercentBy July 31, 2010
    
    Not Less Than 9.0 PercentFrom December 31, 2010 and Until the Order is Terminated
    
    Not Less Than 9.5 Percent
  Liquidity  Hanmi Financial
 Dividends Notes to Consolidated Financial Statements, Note 2  Regulatory
Matters and Going Concern Consideration.
 48




---



##### 



Liquidity  Hanmi Bank
   .
  49




---



##### 



OFF-BALANCE SHEET ARRANGEMENTS
 Note 9  Off-Balance Sheet
Commitments Item 1.
Business  Off-Balance Sheet Commitments
 CONTRACTUAL OBLIGATIONS
  RECENTLY ISSUED ACCOUNTING STANDARDS
 FASB ASC 105, Generally Accepted Accounting Principles
 FASB ASC 810, Consolidations
 FASB ASC 860, Transfers and Servicing
 50




---



##### 



FASB ASC 855, Subsequent Events
 FASB ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820)
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Interest Rate Risk Management  Liquidity and Capital Resources.
 
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   51




---



##### 



Managements Report on Internal Control Over Financial Reporting
  
    
    pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the company;
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. GAAP;
    
    provide reasonable assurance that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the companys assets that could have a material effect
on the consolidated financial statements.
     52




---



##### 



Changes in Internal Control over Financial Reporting
   
    
    intensive review by the loan monitoring department to validate the
appropriateness of loan grades;
    
    expanded additional review of all loan grading changes by management
and senior loan officers;
    
    independent third party review to ensure the assessment of our internal
loan grades.
  
    
    increasing qualitative adjustments based on current and potential loss
scenarios to sufficiently reflect deterioration in the asset portfolio as well as
economic decline;
    
    implementing more stringent assessment of restructured loans by
down-grading all such loans to Substandard;
    
    closely monitoring collateral dependent loans by continually obtaining
up to date valuations;
    
    adhering to more stringent requirements for charge-offs regards to
impaired loans.
  Remediation of Material Weakness
  
    
    increasing management oversight of the loan portfolio by establishing two new
departments to primarily focus on performing quality control review and monitoring;
    
    providing intensive onsite review and training to loan officers and other
branch staffs by management;
    
    outsourcing to independent third parties for credit review to validate the
appropriateness of internal loan grading.
  53




---



##### 



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. (REMOVED AND RESERVED)
 
 ITEM 5. OTHER INFORMATION
  54




---



##### 



ITEM 6. EXHIBITS
 ExhibitNumber
    
    Document3.1
    
    Amended and Restated Certificate of Incorporation of Hanmi Financial Corporation (1)3.2
    
    Certificate of Second Amendment of Certificate of Incorporation of Hanmi Financial Corporation (1)3.3
    
    Certificate of Third Amendment of Certificate of Incorporation of Hanmi Financial Corporation (2)3.4
    
    Amended and Restated Bylaws of Hanmi Financial Corporation (1)3.5
    
    Certificate of Amendment to Bylaws of Hanmi Financial Corporation dated November 21, 2007 (1)3.6
    
    Certificate of Amendment to Bylaws of Hanmi Financial Corporation dated October 14, 2009 (3)4
    
    Specimen stock certificate representing Hanmi Financial Corporation Common Stock (4)10.1
    
    Amended and Restated Trust Agreement of Hanmi Capital Trust I dated as of January 8, 2004 among Hanmi Financial
Corporation, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, as
Delaware Trustee, and the Administrative Trustees Named Therein (5)10.2
    
    Hanmi Capital Trust I Junior Subordinated Indenture dated as of January 8, 2004 entered into between Hanmi Financial
Corporation and Deutsche Bank Trust Company Americas, as Trustee (included as exhibit D to Exhibit 10.1) (5)10.3
    
    Hanmi Capital Trust I Guarantee Agreement dated as of January 8, 2004 entered into between Hanmi Financial Corporation,
as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee (5)10.4
    
    Hanmi Capital Trust I Form of Common Securities Certificate (included as exhibit B to Exhibit 10.1) (5)10.5
    
    Hanmi Capital Trust I Form of Preferred Securities Certificate (included as exhibit C to Exhibit 10.1) (5)10.6
    
    Amended and Restated Trust Agreement of Hanmi Capital Trust II dated as of March 15, 2004 among Hanmi Financial
Corporation, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, as
Delaware Trustee, and the Administrative Trustees Named Therein (5)10.7
    
    Hanmi Capital Trust II Junior Subordinated Indenture dated as of March 15, 2004 entered into between Hanmi Financial
Corporation and Deutsche Bank Trust Company Americas, as Trustee (included as exhibit D to Exhibit 10.6) (5)10.8
    
    Hanmi Capital Trust II Guarantee Agreement dated as of March 15, 2004 entered into between Hanmi Financial Corporation,
as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee (5)10.9
    
    Hanmi Capital Trust II Form of Common Securities Certificate (included as exhibit B to Exhibit 10.6) (5)10.10
    
    Hanmi Capital Trust II Form of Preferred Securities Certificate (included as exhibit C to Exhibit 10.6) (5)10.11
    
    Amended and Restated Trust Agreement of Hanmi Capital Trust III dated as of April 28, 2004 among Hanmi Financial
Corporation, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, as
Delaware Trustee, and the Administrative Trustees Named Therein (5)10.12
    
    Hanmi Capital Trust III Junior Subordinated Indenture dated as of April 28, 2004 entered into between Hanmi Financial
Corporation and Deutsche Bank Trust Company Americas, as Trustee (included as exhibit D to Exhibit 10.11)
(5)10.13
    
    Hanmi Capital Trust III Guarantee Agreement dated as of April 28, 2004 entered into between Hanmi Financial Corporation,
as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee (5)10.14
    
    Hanmi Capital Trust III Form of Common Securities Certificate (included as exhibit B to Exhibit 10.11) (5)10.15
    
    Hanmi Capital Trust III Form of Preferred Securities Certificate (included as exhibit C to Exhibit 10.11) (5)10.16
    
    Employment Agreement Between Hanmi Financial Corporation and Hanmi Bank, on the One Hand, and Jay S. Yoo, on the Other
Hand, dated as of June 19, 2008 (6) 10.17
    
    Hanmi Financial Corporation 2007 Equity Compensation Plan (7) 10.18
    
    Hanmi Financial Corporation Year 2000 Stock Option Plan (8) 10.19
    
    Form of Notice of Stock Option Grant and Agreement Pursuant to 2007 Equity Compensation Plan (1) 10.20
    
    Form of Notice of Grant and Restricted Stock Agreement Pursuant to 2007 Equity Compensation Plan (1) 10.21
    
    Employment Offer Letter with Brian E. Cho, executed November 1, 2007 (9) 10.22
    
    Securities Purchase Agreement, dated June 12, 2009, by and between Hanmi Financial Corporation and Leading Investments &
Securities Co., Ltd. (10)10.23
    
    Registration Rights Agreement, dated June 12, 2009, by and between Hanmi Financial Corporation and Leading Investments &
Securities Co., Ltd. (10)10.24
    
    First Amendment to the Securities Purchase Agreement, dated July 31, 2009, by and between Hanmi Financial Corporation
and Leading Investment & Securities Co., Ltd. (11)
 55




---



##### 



ITEM 6. EXHIBITS (Continued)
 ExhibitNumber
    
    Document10.25
    
    Amended and Restated Term Sheet, dated September 14, 2009, by and among Hanmi Financial Corporation, Leading Investment &
Securities Co., Ltd., and IWL Partners LLC (12)10.26
    
    Second Amendment to the Securities Purchase Agreement, dated September 28, 2009, by and between Hanmi Financial Corporation and
Leading Investment & Securities Co., Ltd. (13)10.27
    
    First Amendment to the Amended and Restated Term Sheet, dated September 28, 2009, by and between Hanmi Financial Corporation,
Leading Investment & Securities Co., Ltd., and IWL Partners, LLC (13)10.28
    
    Final Order, dated November 2, 2009, issued to Hanmi Bank by the California Department of Financial Institutions (14)10.29
    
    Written Agreement, dated November 2, 2009, by and between Hanmi Financial Corporation and Hanmi Bank, on one hand, and the
Federal Reserve Bank of San Francisco, on the other hand (14)14
    
    Code of Ethics (15)21
    
    Subsidiaries of the Registrant (9)31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as
amended31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as
amended32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 200232.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
 
 (1)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Annual
Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 13, 2009.(2)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed with the SEC on August
11, 2009, as amended November 18, 2009.(3)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Registration Statement on Form S-3 filed with the SEC on February 4, 2010.(4)
    
    Previously filed and incorporated by reference herein from Hanmi Financial
Corporations Registration Statement on Form S-4 filed with the SEC on March 20, 2000.(5)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 filed with the SEC on August
9, 2004.(6)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 filed with the SEC on August
11, 2008.(7)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Current
Report on Form 8-K filed with the SEC on June 26, 2007.(8)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Registration Statement on Form S-8 filed with the SEC on August 18, 2000.(9)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Annual
Report on Form 10-K for the year ended December 31, 2007 filed with the SEC on February 29,
2008.(10)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Current Report on Form 8-K filed with the SEC on June 15, 2009.(11)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Current Report on Form 8-K filed with the SEC on August 3, 2009.(12)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Current Report on Form 8-K filed with the SEC on September 14, 2009.(13)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Current Report on Form 8-K filed with the SEC on October 2, 2009.(14)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Current Report on Form 8-K filed with the SEC on November 5, 2009.(15)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Annual
Report on Form 10-K for the year ended December 31, 2004 filed with the SEC on March 16, 2005.
    
    Constitutes a management contract or compensatory plan or arrangement. 56




---



##### 



SIGNATURES
  HANMI FINANCIAL CORPORATIONDate:                May 10, 2010
    By:
    /s/ Jay S. YooJay S. YooPresident and Chief Executive OfficerBy:
    /s/ Brian E. ChoBrian E. ChoExecutive Vice President and Chief Financial Officer 57